It is the first fully functioning attack on an iPhone since Apple released version 2 of the device in 2008, said Charlie Miller, the hacker who is set to follow the iPhone attack with an exploit he hopes will hack into the contest's MacBook Pro (his takeaway, should he succeed: the laptop and $10,000).

Apple introduced a number of advanced security measures with iPhone 2.0, including a "sandbox" in the device's kernel that restricts what hackers can do on a compromised machine, and a cryptographic code-signing requirement that makes it harder for them to run their initial malicious payload.

"When iPhone 2.0 came out, it became a lot harder" to hack the device, said Miller, who earned fame three years ago as the first person to hack the iPhone.

In fact, Weinmann said he had been set to compete in last year's Pwn2Own contest but had to abandon his plans at the last minute when he discovered his attack only worked on jail-broken phones, which have been hacked to run unapproved applications. Jail-breaking circumvents the iPhone's memory protections, but the Pwn2Own rules force contestants to use unmodified phones.

The Pwn2Own contest pays contestants for their exploit code, which leverages software flaws to give the attacker a foothold on the machine being attacked. But because of the iPhone's sandbox architecture, Weinmann and Iozzo actually spent much more time working on their payload software.

To make their attack work, they used a technique called "return-oriented programming," in which they essentially cobble together instructions from different parts of the iPhone's memory. But even with this technique, the iPhone's sandbox restricted what they could do once they had hacked into the machine.